(Excerpt from a client folio published by Morgan Stanley)
Miscellaneous Business, Labor and Manufacturing
A handful of other commercial issues currently dominate the attention of lawmakers and federal officials – payday lending reform, credit card abuse, union elections, infrastructure improvements – and Obama has identified each as a priority in 2009.
In general, Obama supports a more consumer protection-oriented approach than McCain would have. A good example was the Obama campaign’s focus on payday lending abuses. To protect lower-income individuals, Obama has announced his intention to cap interest rates on payday loans at 36 percent, while seeking to provide borrowers with clearer, simplified disclosures on loan fees, payments and penalties. He would encourage banks and credit unions to increase small-denomination, short-term consumer loans.
On credit card reform, Obama would look to create a rating system to enable consumers to evaluate the risk and benefits on every credit card, as well as a Credit Card Bill of Rights to deter unfair practices. He seeks to ban unilateral changes to card terms, prohibit interest on fees, require prompt crediting of payments, and to mandate that rate increases only apply to future debt. Obama has well-placed Democrat allies who have already laid the groundwork on this issue in the 110th Congress, so reform is likely.
Organized labor will see a significantly more receptive White House under Obama than in past years under President Bush. To wit, Obama has received grades of 100 percent from the AFL-CIO and 94 percent from the Service Employees International Union for his labor efforts in the Senate. Increasing the minimum wage has been and will remain an Obama priority. In the 110th Congress, Obama voted in favor of increasing the minimum wage to $7.25/hour. He has announced his intention to continue to seek minimum wage increases and will look to index the minimum wage to inflation.
To reverse the waning influence of unions in American business (union participation has declined from 24 percent of American workers in 1970 to 12 percent in 2006), Obama will look to enact the Employee Free Choice Act, a bill to make union organizing easier by eliminating the secret ballot from union elections. Most businesses have opposed the concept and other efforts to increase the role of unions. If successful, Obama’s labor policies will drastically change the dynamic of labor relations that has characterized the past several decades in American commerce.
Obama will also look to create jobs and stimulate the economy through expanded manufacturing and infrastructure spending in 2009 and beyond. He would double funding to the Manufacturing Extension Partnership, which works with manufacturers to develop and implement new technologies that improve manufacturing efficiency. On transportation, Obama has said that “it is critically important for the United States to rebuild its national transportation infrastructure,” including our roads, bridges, ports, airports and rail. He envisages a National Reinvestment Bank to expand federal transportation investments, paid for with $60 billion in federal funds over 10 years.
*~*~*~*
Trade
It is a well-established maxim that what candidates say about trade policy is not always what they do when elected, and this year is no different. It is obviously too early to tell how President Obama will carry himself on the world stage. Trade, however, is not likely to top the agenda for the first couple of years due to the urgency of other issues and the growing ranks of trade critics on Capitol Hill. Given the strong antitrade mood in Congress, Obama is unlikely to initiate any sweeping trade liberalizing moves, especially considering that many incoming freshmen Democrats ran on anti-trade platforms.
More specifically, during the Democratic primaries, Obama called for a renegotiation of NAFTA with Canada and Mexico. There would be little, if any, pressure on Obama to keep this campaign promise since renegotiation is not a top priority for his supporters. Indeed, it is unclear how a settled NAFTA treaty could even be re-opened. He also opposed the Colombia FTA and South Korea FTA, so progress is unlikely next year, especially considering the expanded Democratic congressional majority.
Buttressing this theory, Obama softened his anti-trade rhetoric considerably once he secured the Democratic nomination. In recent months he has said he favors free trade in general, but that such agreements must include strong protections for labor and environment and that trade must be “free and fair for all.” Importantly, such conditions are also critical for attracting more support in Congress. A top trade adviser to Obama and likely pick for the top job at USTR, Dan Tarullo, has stated that President Obama could be expected to devote more attention and resources to enforcing existing trade agreements. Democrats in Congress have been deeply critical of the Bush Administration for failing to enforce existing trade agreements, bringing less than half the number of cases to the WTO compared to the Clinton Administration. Tarullo has stated that Obama would consult closely with Congress on trade issues.
President-elect Obama has also expressed support for the successful conclusion of the Doha Round of multi-lateral trade negotiations, but the Obama campaign stated that the agreement must include benefits to workers and the poorest countries. Negotiations collapsed in July. While efforts are underway to revive them, hope for a breakthrough rests with China and India, which so far at least, do not appear to want a deal. Obama has also spoken about the importance of helping workers who lose their jobs as result of overseas competition, a shared priority of many members of Congress.
The bright spot on the trade agenda is that despite the recent slowdown in the global economy, US exports have been growing, which has cushioned the blow of job losses in other sectors of the economy. Policymakers on both sides of the aisle will be cautious about any proposals that threaten the benefits of free trade.
